Sell EUR-GBP on a tactical basis – Standard Chartered

Nick Verdi, Senior FX Strategist at Standard Chartered, recommends that investors sell EUR-GBP on a short-term tactical 1M basis (spot target: 0.8200, spot stop-loss: 0.8736).

Key Quotes

“Although GBP-USD downside remains a compelling medium-term trade on uncertainty over the economic fall-out of Brexit negotiations (we forecast GBP-USD at 1.17 in Q3-2017), more balanced positioning is required before the downtrend can resume, in our view. Indeed, the GBP is one of the best-performing G10 currencies since Article 50 was triggered on 29 March. Brexit talks are expected to formally begin at the EU summit on 22 June.”

“In the meantime, the euro area has important risk events that could undermine the EUR, particularly in the context of short positioning that is less stretched than in the GBP versus the USD. A strong showing by Marine Le Pen in the 23 April first round of the French presidential election and a more-dovish-than-expected European Central Bank (ECB) stance at its 27 April meeting could dent EUR sentiment.”